BUS101: Introduction to Business

Despite international trading laws and declarations, countries continue to face challenges around ethical trading and business practices.

LEARNING OBJECTIVES

Explain how and why groups place ethical barriers on international trade

KEY TAKEAWAYS

Key Points

• Although some argue that the increasing integration of financial markets between countries leads to more consistent and seamless trading practices, others point out that capital flows tend to favor the capital owners more than any other group.
• With increased international trade and global capital flows, critics argue that income disparities between the rich and poor are exacerbated, and industrialized nations grow in power at the expense of under-capitalized countries.
• Anti- globalization groups continue to protest what they view as the unethical trading practices of multinational businesses and capitalist nations, often targeting groups such as the WTO and IMF.

Key Terms

• GDP: Gross Domestic Product (Economics). A measure of the economic production of a particular territory in financial capital terms over a specific time period.
• neoliberalism: A political movement that espouses economic liberalism as a means of promoting economic development and securing political liberty.

Ethical Barriers

International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of gross domestic product (GDP). The rise of industrialization, globalization, and technological innovation has increased the importance of international trade, as well as its economic, social, and political effects on the countries involved. Internationally recognized ethical practices such as the UN Global Compact have been instituted to facilitate mutual cooperation and benefit between governments, businesses, and public institutions. Nevertheless, countries continue to face challenges around ethical trading and business practices, especially regarding economic inequalities and human rights violations.

Arguments Against International Trade

Capital markets involve the raising and investing money in various enterprises. Although some argue that the increasing integration of these financial markets between countries leads to more consistent and seamless trading practices, others point out that capital flows tend to favor the capital owners more than any other group. Likewise, owners and workers in specific sectors in capital-exporting countries bear much of the burden of adjusting to increased movement of capital. The economic strains and eventual hardships that result from these conditions lead to political divisions about whether or not to encourage or increase integration of international trade markets. Moreover, critics argue that income disparities between the rich and poor are exacerbated, and industrialized nations grow in power at the expense of under-capitalized countries.

Anti-Globalization Movements

The anti-globalization movement is a worldwide activist movement that is critical of the globalization of capitalism. Anti-globalization activists are particularly critical of the undemocratic nature of capitalist globalization and the promotion of neoliberalism by international institutions such as the International Monetary Fund (IMF) and the World Bank. Other common targets of anti- corporate and anti-globalization movements include the Organisation for Economic Co-operation and Development (OECD), the WTO, and free trade treaties like the North American Free Trade Agreement (NAFTA), Free Trade Area of the Americas (FTAA), the Multilateral Agreement on Investment (MAI), and the General Agreement on Trade in Services (GATS). Meetings of such bodies are often met with strong protests, as demonstrators attempt to bring attention to the often devastating effects of global capital on local conditions.

On November 30, 1999, close to fifty thousand people gathered to protest the WTO meetings in Seattle, Washington. Labor, economic, and environmental activists succeeded in disrupting and closing the meetings due to their disapproval of corporate globalization. This event came to symbolize the increased debate and growing conflict around the ethical questions on international trade, globalization and capitalization.

Criticism of the Global Capitalist Economy: Demonstrations, such as the mass protest at the 1999 WTO meeting in Seattle, highlight ethical questions on the effects of international trade on poor and developing nations.